would you do this if you had the option and you had no debts to pay off? Annuity rates are pretty bad now so isn't it better to take the cash and have more control over the money? An annuity can always be acquired later if required.
We are reluctant to go to an IFA for advice as the last time we did that their advice was an expensive mistake.
What life stage are you at? If you are not currently retiring or retired it is quite likely that you won't have to buy an annuity. So you could look at a SIPP as a way of investing in other things to provide an income in retirement.
Are you about to retire and buy an annuity? If so, I guess it depends if you are confident you can get a better return on your money by making investments yourself. But that will be more risky than the annuity.
If you are not at the stage of buying the annuity now, then the thing you need to compare with is the interest rates you are getting on your "pension pot" and whether you think you can do better.
about to retire. Having looked at annuity rates you don't have to be brilliant at investment, the point at which you'd recover the amount given up is something like 25-30 years. That assumes that if inflation rates/ interest rates are as they are now. If inflation increase interest rates would probably rise too and even if the gap widens you still don't break even for 20+ years.
I write this on the assumption you are talking about a personal pension.
The lump sum is tax free, so even if you need the income you would take it. Timing is the issue here. If you don't need it, could it remain invested? Furthermore you don't HAVE to buy an annuity, but you might struggle with a small pot to do anything else (very small though and it could be released under triviality rules). It's the size of the pot that will sort of push you one way or another.
The lump sum is a way of accessing some of the money that is otherwise locked up with quite a few restrictions on it (the tax incentive for pensions is one of the ways of compensating people for those restrictions). If you need an income you can invest the lump sum in other ways, but again size matters as like it or not there are charges one way or another.
That's a piece of string answer and doesn't give me any basis on which to give you worthwhile advice. Decisions now will impact on the rest of your life. I'm not going to beg for information to help you!
I agree that it is impossible to advise without knowing your position and if you need income at the present time. If you are still earning or have other income then of course whatever pension you get from the annuity will be taxed. I'd be inclined to take the lump sum but you probably need expert advice.
Advice is advising you what to do i.e a recommended course of action.
An answer to a question you ask is just information that is specific to you. This may help you to make your own more informed choice, but it doesn't mean that it will help you uncover areas that you have not thought to question, perhaps because you are not aware of an issue.
I'm not trying to split hairs - honest - but TPAS will only answer what you ask, they will not pose possibilities, nor would they help assess relative risk or balance a course of action to your specific circumstances. They are good though for rules & regs and answering 'can I do X' type questions. I think the OP appears somewhat confused about what can and cant be done so they would certainly have a role in clearing up the confusion.